Bitcoin

Delay in Bitcoin ETFs is Testing Institutional Investor’s Patience

Due to the latest decision of U.S. Securities and Exchange Commission (SEC), the fate of three bitcoin exchange-traded funds (ETFs) remains undecided. The decision of bitcoin ETFs that has caught the attention of enthusiasts and advocates of the crypto space for a long time is delayed again. According to SEC’s latest disclosure, the final decisions on ETFs proposed by Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix will be announced on 29th September,13th and 19th October.

While allotting different deadlines for decisions, SEC’s comment common to all of its responses read:

The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.

An exchange-traded fund is a type of investment, introduced to the world back in 1993. Although ETFs were launched in 1993, they gained popularity and attraction of the general public after a decade of their launch. Basically, ETFs are marketable securities that track bonds, stock index, a commodity, or a combination of assets.

In simple words, ETF owns some assets and divides the ownership of those assets into shares. These assets can be shares of various assets, for example, foreign currency, stock, bonds, oil futures, etc.

There has been quite some time since the proposals were filed by the aforementioned asset managers. While VanEck filed in January 2019, Bitwise’s current application was submitted to the SEC on February 2019. Being the latest ETF proposal among all, the proposal by Wilshire Phoenix was filed in June 2019.

Since filing, the decision of bitcoin ETF proposals has seeing delays and extensions. Previously, the SEC postponed the decision from March to May. Later, the regulatory body, empowered by securities law delayed its decision on financial products, in order to gather information to exercise its power again. In May, the decision was rescheduled for August and now it’s put off till October.

In the world of cryptocurrencies, enthusiasts and investors hope to see a combination of ETF traits with the largest cryptocurrency by market cap, bitcoin (BTC). The idea of ETF that tracks bitcoin (BTC), had been brought to the U.S. Securities and Exchange Commission (SEC) several times in the past but, up till now, it has not been approved or disapproved yet.

READ ALSO: Facebook’s Libra Hearings Poses a Threat to Mass Crypto Adoption

Bitcoin ETF holds immense significance as many institutional investors are waiting to pour their investments through it. Usually, ETFs allow users great ease of access to assets that are otherwise very difficult to access. Besides, the buyers are allowed to invest without needing to directly buy or sell the asset.

As there are several problems to cryptocurrencies, institutions prevent their exclusive direct affiliations with cryptos. Instead, they prefer to benefit with shares of the cryptocurrency that doesn’t require direct involvement with that cryptocurrency. Only ETF can assist the concerns of institutions and provide them with an indirect way of utilizing cryptocurrencies such as bitcoin.

Among several problems making bitcoin ETF necessary for institutions is volatility. The fluctuations in the market and its volatile nature making the price of bitcoin very unpredictable is problematic for big institutions. Moreover, the fraudulent practices of money laundering and the risks of hacks are also the downside of cryptos such as bitcoin. Therefore, indirect dependence on bitcoin through an ETF is highly demanded by the institutions.

The SEC is quite active in the crypto space, scrutinizing daily events taking place in the space and taking immediate actions upon them. Recently, SEC filed a complaint against Reginald Middleton who owned a New York based company Veritaseum Inc. and the Delaware-based company Veritaseum LLC.

According to the commission’s findings, the defendant misinformed the investors and raised about $15 million in an ICO. Due to several treacherous and false commitments to the investors, SEC had requested the U.S. District Court to immediately freeze the assets belonging to the defendant. Moreover, SEC had also asked the court to grant it the right the access of relevant documentation.

In response to the allegations raised, the defendant clarified that VERI tokens, pegged in the ratio 30:1 to Ethereum (ETH), were issued to investors. According to claims made by the defendant,  consulting and advisory services could be availed with VERI tokens.

The SEC is strictly observing the dynamics of the crypto space followed by implementing serious measures. The case of VERI tokens serves as an example for SEC’s focus and attention to the crypto space.

However, apart from a plethora of steps taken to administer, protected and crafting a viable environment for users, the decision of bitcoin ETF remains to be an enigma for investors and enthusiasts. It would be of interest to see if the mystery of bitcoin ETF gets resolved in 2019 or not.

READ ALSO: Rivaling Bitcoin, Federal Reserve Plans to Launch 24/7 Payment System

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Fatir Malik

Electrical engineer by profession, turned into blockchain developer. Fatir contributes regularly with his insights about latest developments in fintech sector. Contact the editor at editor.opinions@blockpublisher.com

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